SUNNYVALE, Calif.--Advanced Micro Devices Inc. today reported a net loss of $9.2 million on sales of $902.1 million in the first quarter. Despite shipping a record 8 million PC processors in the quarter, AMD said its Q1 revenues sequentially dropped 5% from the fourth quarter, partly because of weakness in flash memories.
AMD predicted that sales would continue to slip sequentially in the current second quarter because of seasonal trends in PCs, uncertainty in flash memory markets, and potent pricing competition with processor rival, Intel Corp. AMD said sales are expected to sequentially decline slightly-to-9% from Q1 to a range of $900-to-$820 million in the current quarter.
During a conference call with analysts today, AMD chairman and CEO W.J. (Jerry) Sanders III said the company would be profitable at the upper $900 million range of the Q2 guidance, but it would again lose money at the low end of the estimate. He would not elaborate.
Sales of AMD memory products--primarily flash memory devices--continued to be weak, amounting to $160 million in the first quarter, an 18.4% decline from $196 million in the fourth quarter, said the company.
AMD said its PC processor sales totaled $684 million in the first quarter, a 3% sequential decline from $703 million in Q4 partly because of seasonal factors in the marketplace. AMD's PC processor sales were 3% higher than $661 million in Q1 of 2001.
But still, AMD officials were upbeat about the first quarter results. "We believe AMD grew unit market share in PC processors, defined as Microsoft Windows-compatible processors for mobile, desktop, server, and workstation computing," Sanders said, while issuing the results today. "Sales of mobile processors grew in both units and dollars from the prior quarter."
AMD's loss of $0.03 per share beat Wall Street's consensus, which was at a loss of $0.06 per share, according to First Call/Thomson Financial.
Sanders said AMD's conversion to 130-nm (0.13-micron) technology is "going extremely well, and we now expect to complete the transition to 100% of PC processor production on 130-nm technology ahead of our previously announced year-end timetable."
Sanders said the industry's "flash crash is now behind us."
"For the second consecutive quarter, total shipments in both units and bits increased while pricing remained weak," said the chief executive officer. "Bookings for flash memory products improved over the prior quarter, and visibility is improving. Demand was strongest for our higher-density flash memory devices." He added that the company is seeing signs of a recovery in the cellular telephone sector.
"We will begin sampling flash memory products with our proprietary MirrorBit technology in the current quarter, and expect that these products will contribute to Memory Group revenues in the second half of the year," Sander said. "MirrorBit technology is a breakthrough in memory cell architecture that enables a flash memory cell to store twice as much data as a standard flash memory cell with no compromise in device performance and reliability."
Sanders reported that AMD saw working silicon on the 64-bit Hammer processor series in January and is confident that it will be able to begin shipments of products by the end of 2002. Last February, AMD demonstrated prototypes of Hammer processors running 64-bit and 32-bit application software (see Feb. 26 story).
AMD said it now expects PC processor unit sales in the second quarter to follow seasonal patterns, which the company said is generally a sequential decline in the 5-to-10% range.
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